Fumio Urano quit as Pentax president today, the company said, after board members opposed his proposal to merge with Hoya in a stock transaction. Hoya, Japan's largest optical-glass maker, last week made a cash bid to take over Pentax that was valued at 17 percent more than the original stock offer.

``These people have grown up with Pentax and worked there for many, many years and they don't want to lose their company,'' said Yoji Takeda, who helps manage $900 million at RBC Investment (Asia) Ltd. in Hong Kong. ``The company still maintains their traditional Japanese-style mentality.''

Pentax, which made the country's first SLR model in 1952, is relying less on its camera business because of price declines and increased competition from Canon Inc. and Sony Corp. Hoya is seeking to acquire Pentax's medical equipment business to spur earnings growth.

Hoya said in a statement today it offered a takeover bid for Pentax on April 7 and is waiting for the company's response.

The offer was to buy at least 51 percent of Pentax for about 770 yen a share, Hoya spokeswoman Akiko Maeyama said by telephone. Hoya will also consider other ways to merge the two companies' operations, Maeyama said, declining to elaborate.

Pentax will continue talks with Hoya on combining their businesses, including a possible takeover, Takashi Watanuki, the company's new president, said at a briefing in Tokyo.

Watanuki said he opposed Hoya's previous merger plan at a board meeting today. The executive, 54, joined Pentax 29 years ago and was most recently in charge of corporate development.

Seven-Year Stint

Shares of Pentax fell 3.9 percent to 769 yen at the close on the Tokyo Stock Exchange. The stock added 58 percent in the past six months, compared with a 7.2 percent gain in the Nikkei 225 Stock Average. Hoya's stock dropped 1.2 percent to 4,090 yen today and fell 11 percent in the past six months.

Urano, 64, who headed Pentax for almost seven years, led the company back to profit in 2003 after three years of losses, by focusing on higher margin single-lens reflex cameras and medical equipment. The value of the company's stock has more than tripled since he took over in June 2000.

Pentax in October cut its full-year profit forecast because of price declines of parts used in digital cameras. The company projects 31 billion yen ($260 million) in net income for the year ended March, less than the 34 billion yen forecast earlier.

Medical Equipment

Operating profit at the optical components division, which includes digital camera parts, is forecast to fall for three years, Pentax said in a statement in November 2006.

At its life-care division, which sells medical equipment, operating profit rose in the past three years.

Hoya is expanding sales of medical equipment such as endoscopes and surgical scissors to help trim a reliance on glass substrates used in semiconductor manufacturing.

Sparx Group Co., a Japanese asset management company, and Fidelity Investments are Pentax's two biggest shareholders, controlling a combined 37 percent of the company, according to data compiled by Bloomberg.

To contact the reporter on this story: Hiroshi Suzuki in Tokyo at [email protected] . Last Updated: April 10, 2007 06:43 EDT

As far as I can see it is a go ahead
Urano , the president and one of the two objecting to the merger , has quit.
By western logic, that paves the way for the merger.
The fact that it is a go ahead does not mean if it is in the interest of the Pentaxians as a whole.

As far as I can see it is a go ahead
Urano , the president and one of the two objecting to the merger , has quit.
By western logic, that paves the way for the merger.
The fact that it is a go ahead does not mean if it is in the interest of the Pentaxians as a whole.

Daniel , Toronto

This is interesting news. However, as I read it, it sounds like the past president was in favor of the proposed merger and was actually the one who proposed it. The new president sounds like he might beopen to the ideaof a merger but under different terms.

It has to be a serious fight to cause a company to jettison a president who has tripled stock prices in seven years!

As far as I can see it is a go ahead
Urano , the president and one of the two objecting to the merger , has quit.
By western logic, that paves the way for the merger.
The fact that it is a go ahead does not mean if it is in the interest of the Pentaxians as a whole.

During the extraordinary board meeting on Tuesday, Pentax also decided to demote Urano, 63, and Katsuo Mori, 62, a managing director.

Urano and Mori, who had spearheaded the merger talks with Hoya, will remain on the board.

The Pentax board confirmed last week's decision to give up the plan to merge with Hoya through an equity swap.

Urano and Mori argued that the voting on April 4 was invalid, but Tuesday's board meeting concluded that the motion to cancel the merger plan had been approved with support of the six directors besides Urano and Mori.

Hoya and Pentax agreed on Dec. 21 to merge in October under a holding company through a stock swap.

However, the Pentax board of directors had been divided over the plan, with six of the eight board members opposing the merger ratio of one Pentax share for 0.158 Hoya share.

After Pentax rejected the planned merger through a stock swap, Hoya proposed a public tender offer on April 6.(IHT/Asahi: April 11,2007)

........It's fun to try to read between the lines........

Urano was dismissed to take responsibility for the management infighting over the planned merger with Hoya.

Hoya said Tuesday it will continue talks with Pentax over the merger, possibly through a public tender offer.

However, the company postponed a decision to launch a public tender offer for Pentax.

(in other words foggta bout it)

The decision was made at Hoya's extraordinary board meeting on Tuesday after the company received a letter from Watanuki, which said Pentax intends to continue talks over operational integration, in the broad sense of the word.